Gibson Biddle @gibsonbiddleProducts That Count NYC November 15, 2017

2. Netflix:
From Product Strategy
to Execution
Gibson Biddle
@gibsonbiddle
Products That Count NYC
November 15, 2017

3. Gibson Biddle
EIR Product, Adviser, Teacher (2015)
CPO, Chegg (2010)
VP Product, Netflix (2005)
SVP, The Learning Company/Mattel (1995)
Producer, Electronic Arts (1991)

4. Product questions
• Do French & Americans
have similar movie tastes?
• Is demographic data
important?
• Should rows “float”?
• Should Netflix cancel
“House of Cards”?
• Should Netflix send a
reminder before your
“Free Trial” ends?

5. • Encourage independent decision-making by employees
• Share information openly, broadly and deliberately
• Are extraordinarily candid with each other
• Keep only our highly effective people, and
• Avoid rules
At Netflix we:
Our core philosophy is people over process.

6. 1.Strategy models
2.Meeting setup
3.Simulation
From Strategy to Execution

7. 1- Strategy
GLEe & DMH models
Netflix Product Strategy

8. Strategy
• Plan to achieve long-
term goal
• Hypotheses for how
to build customer &
shareholder value
Tactics
• Project or experiment
against a strategy

9. Why strategy?
• Ensure teamwork in highly
aligned, loosely coupled way
• Motivating, high-level view
• Discipline without process
• Enable prioritization &
saying “no,” a lot

10. Focus & phasing: GLEe
1. Get big on ______
2. Lead ________
3. Expand _________

11. Focus & phasing
1. Get big on DVDs
2. Lead downloading
3. Expand worldwide

12. Every company rides the
growth wave up, until it
crests then falls. The
secret is to continually
create the next growth
wave.”
Jeff Kagan, Industry Analyst
“

13. The DMH Model
• Delight customers in
• Margin-enhancing,
• Hard-to-copy ways

14. Netflix 1999

15. Netflix 2007

16. Netflix 2017

17. Delight customers
• Personalized
• Instant delivery
• Value
• Easy
• Selection
• New releases
• All devices
• More original content
• Download & playback
• Multiple streams
• 4K video and audio
• Voice ID & control

18. Margin-enhancing
• Price & plan tests
• Used disk sales
• Advertising
• Long-tail content

19. Hard-to-copy
• Brand
• Network effects
• Unique technology
• Economies of scale
• Switching costs
Examples
• “Movie enjoyment made easy”
• Device virtuous cycle
• Personalization
• Content costs
• Profiles

20. Hypotheses
• Personalization
• Instant
• Price & plans
• Easy
• Huge selection
• Exclusives
• Open APIs
• Movie-finding tools
• Cinematic/entertaining
• Community (“Friends”)

21. Results
• Personalization
• Instant
• Price & plans
• Easy
• Selection
• Exclusives >> Originals
• Open APIs >> Device ecosystem
• Movie-finding tools
• Cinematic/entertaining
• Community (“Friends”)

22. Product Strategy
• GLEe +
• DMH +
• Tactics & Metrics

23. Appendix
Netflix 2005: Product Strategy

24. Metric:
Optimize retention against cost
Willing to spend up to $200 per saved customer

25. Appendix
Focus & phasing
1. Get big on DVDs
2. Lead downloading
3. Expand worldwide

26. Product Strategy:
• Personalized
• Instant
• Margin-enhancing
• Easy
Tactics:
• Netflix Prize
• 100 Hubs, streaming, device ecosystem
• Price/plan tests
• Progressive disclosure

27. • Personalized
• Instant
• Margin-enhancing
• Easy
Metrics:
• 25% of customers > 50 ratings @6 weeks
• 95% disks < day; 10% watch > 15min/mo.
• Gross margin, LTV
• ?% cust > 3 titles in First Session Queue
Product Strategy:

28. Personalization
Delights customers in hard-to-copy, margin-
enhancing ways over three “chapters” of growth

29. The secret to Netflix
success: high-
cadence failure”
Gibson Biddle
“

30. 2- Meeting Prep
Strategy for each
swim lane

31. Goals of quarterly meeting
Provide context through strategy
Share and debate:
• key results & learnings, and
• future hypotheses
Develop business maturity, and
Determine level of investment.

32. Netflix Swim lanes
• Personalization
• Merchandising
• Search
• DVD
• Instant
• TV
• Community
• Open APIs
• Help/account
• Non-member

33. For each swim lane
Key strategies
Tactics, and
Metrics

35. 2017 Non-member metrics
Deliver 30M WW members
through increased:
• Trials/Visits (2.1%)
• Month One retention (94%)
• Lifetime value ($180), and
• Lower acquisition cost ($50)
Data estimates for illustration only.

36. Strategies
• Brand & positioning
• Price/plan/free trial
• Personalization
• Multi-platform
• Open APIs
• Social
Tactics
• Original content
• 4K plan testing
• Featured titles
• Alexa launch
• Universal search
• Recommend to a friend

37. Meeting prep
Publish via Google slides
Articulate overall strategy + pod strategy/tactics/metrics
Describe results, learning & future hypotheses
Data & design rich

38. 3- Simulation
Non-member

39. Rules of engagement
Ask Q’s, form opinion, debate
NOT a decision-making meeting
CEO-level communication

40. Who’s in the meeting?

41. End of free trial reminder

43. Hypothesis
“Your free trial is almost
over” reminder will:
- Decrease Month 1 retention,
- Decrease LTV,
BUT also:
+ Improve CS call rate, and
+ In LT, Increase T/V & “starts”

44. Results
• M1 Retention drops from
94% to 89%
• M2 Retention > Control
• LTV drops: $181 to $177
• Estimated annual loss: $40M
• CS savings: $5M
• Brand & long-term effects?

45. Data estimates for illustrative only

46. Discussion & debate
• Launch, or not?
Result
• Launched to all
• Positive WOM and brand effect
• Customer more likely to restart
• Revenue shift not loss?
• Possible long-term gain?

47. Good meeting like a movie
Well-defined script
Strong prep & engagement
Drama:
• Success, failure & diving catches
• Debate, decide, & do
Denouement: Beer & NPS survey

48. The meeting = culture mechanism
Highly aligned, loosely coupled
Candor
Customer, business & data-focused
Fast-paced learning to develop business maturity

49. 1.Define the overall product strat, metrics & tactics
2.Repeat for all of your swim lanes, then
3.Execute your first quarterly prod start meeting
4.Keep getting better
Next Steps for You

50. If you want to build a ship, don’t drum
up the people to gather wood, divide
the work, and give orders. Instead
teach them to yearn for the vast and
endless sea.”
Antoine de Saint-Exupery
The Little Prince
“

51. Questions?

52. Resources
www.gibsonbiddle.com for videos
"How to Run a Product Strat Meeting"
Follow me on LinkedIn
Follow @gibsonbiddle on Twitter
gbiddle616@gmail.com

53. Feedback
“Feedback is the
breakfast of champions.”
Ken Blanchard

54. Jan. 18 NYC “Product Leader Summit”
Apply at: www.productleadersummit.com
80-100 CEOs, CPO’s, VP, and Director-level product leaders